Aloha, Mr. Hands: What I would do with EMI’s new music business

Guy Hands

Aloha, Mr. Hands,

We’ve never met, though we have friends in common. In addition to working with one of your artists off/on for the past 14 years I was GM of Yahoo! Music for a bit (I recently left to join a startup you’ll hear more about soon, Topspin). I commend you for having the guts to take on the EMI challenge. While I know everyone is beating up EMI for being at the bottom of the heap at the moment, EMI also has the least to lose and still a great shot at building a new industry on top of a valuable catalog. We are all watching with a great deal of interest to see if you can pull it off. I am sincere in wishing you the best and looking forward to meeting you in person.

I was having lunch (and an incredible Rosé) on the beach with some folks from your company at MIDEM this year and after everyone was slightly buzzed I earnestly threw out my vote for how to change EMI’s new music business. I was expecting someone to explain to me why my ideas were terrible or simply impractical, but instead they said, “I wish you’d tell that to Guy Hands.” I promised them I would. That was back in January but I haven’t entirely lost the thread. True to my word, I’m finally making the time to jot my thoughts down here. Sorry I haven’t written sooner, it’s been a busy year for me. I’m sure what I present is a strategy that has already been discussed at your company; I don’t claim to have discovered anything novel. But perhaps my vote for the approach below will count for something.

In a nutshell: With the disappearance of advantaged label competencies such as superior production, distribution, and marketing, reconfigure your labels to be based around affinities and focused narrowly enough to serve roughly the same audiences from release to release. The labels would be very small teams responsible for fan cultivation, focused and direct marketing, and A&R. They would rely on EMI for service, support, and tools (generic marketing would happen on the EMI mothership, for example).

Now in a bit more detail…

Labels used to bring a lot to the table:

  • Capital (aka money, not to be confused with Capitol when discussing EMI). Making records was expensive. Up until ProTools arrived on the scene there were less than 500 “professional” studios in the US and only 2500 people that knew how to operate them. Making “professional” sounding (Supertramp, REO Speedwagon, Styx, you know) albums was expensive.
  • Distribution. Vinyl records were heavy. Getting records to Musicland, Tempo, Peaches, Tower, and even Schoolkids took a fleet of trucks and people on the ground managing distribution. Al Teller once told me when he was running Columbia he used to take artists into the local record store to show them how well the Columbia product was stocked. That’s because distribution was HARD and it MATTERED. And big companies could do it much better than small companies could. But that’s gone. Distribution is trivial and none of the stores I mentioned even exist anymore (SCHOOLKIDS A^2 RIP, you gave me so much as a kid).
  • Marketing. Lets face it, until recently music marketing meant radio and then MTV. Nothing else really moved the needle except maybe paying for placement at retail and in retail cooperative advertising (see “Distribution”, above, for why that is starting to lack, too). But now that your customers’ attention is going elsewhere (see my original Media 2.0 Physics presentation from 2+ years back for more on attention scarcity) your marketing is becoming less efficient just as it is becoming more important.

Without the advantages of access to capital and a distribution stranglehold, marketing (which will come to mean both acquiring new fans and managing your relationship with existing ones) is where the real battles of the new music industry will be fought. The question I would be asking is: What real, defensible advantages do we have in marketing?

Since marketing no longer means dealing with independent radio promoters, radio stations, and music video television stations for play and instead means building real, trust-based relationships with fans directly, there’s no efficiency in marketing Robbie Williams today and Iron Maiden tomorrow. You’re lacking the focus a Vagrant or Victory (or closer to my heart, Dischord or from the “wildly profitable” category, Jive in its late 90s heyday) who are more or less going back to the same group of fans with each release. Hell, Vagrant even spun off two new labels, one for kids and one for heavier music. They’re focusing on what they know and segmenting their marketing efforts by affinity group.

If I’m an artist, I’m probably better off having a small label start building my career than I am submitting to a major, going through the buckshot marketing machine and hoping against hope they’re going to break me at radio or MTV. If the small label has an existing relationship with a group of people already inclined to like my style, they have a better chance at building my career from the bottom-up than I have hitting it big in the channels of radio or MTV.

If, as this hypothetical artist on an indie label, I get traction, will I then move up into the major system? In the old days I *had* to if I wanted to reach a wider audience, but not anymore. If I’m the White Stripes of tomorrow do I do a 360 deal with the label or do one with myself? I can afford to record my own music, I can distribute in 100 different ways by myself (and keep more of the profits), so if I’m going to partner with you for my releases you’d better have better access to a larger audience than I could generate on my own. If my song fits in the limited (and shrinking) channels of radio and music television I might have a shot. But if not, what do you offer?

If you had a set of meaningful, affinity-based labels you would have the real asset of a trust-based relationship with a captive audience to offer. Every artist wants to be on the same label as their musical heroes. And consumers need filters.

Plus you would have a powerful asset smaller labels wouldn’t: You would still keep a “special forces” virtual label team working the acts that are ready to breakthrough to the mainstream. When an artist is ready to break out of the box the affinity label draws around them, you have the infrastructure, team and experience to take the act mass market, worldwide, QUICKLY. Small labels can’t offer that to an artist. Your labels would be very attractive to artists as you’d have built-in audiences to bootstrap them with, and also the rocket fuel should they stumble upon the next Funky Cold Medina or Bust A Move (sorry, Delicious Vinyl Mixtape in the car).

You have a couple such labels already. Blue Note is an obvious one, though it’s a long way from the golden days of Rudy Van Gelder. DFA is a more recent addition that fits the bill, I hope you can hang on to them. No offense meant to my snowboard friend Jason but what do Daft Punk, Meat Loaf, KoRn, and The Stooges have in common from an audience perspective? How is there any efficiency in the same marketing team working all of those records (and scads of others just as unaffiliated) in the past year? (Oh and btw, Syd, every link on HollywoodAndVine.com takes me to a 404…) I would break these old labels up into new labels which can concentrate on and build the trust of like-minded audiences, post-haste.

If you look at my aforementioned Media 2.0 Physics presentation from a couple years back you’ll see I’ve been saying something similar for a long time. I’ve spoken to a number of folks at the majors about this over the years and they all seem to get what I’m saying, but for one reason or another it just isn’t practical for them to focus like this. One friend at a major is consolidating all the “rock” acts under one heading but by his own admission it’s not as focused as I’m describing above. My guess is he’ll have some increased success with this increased focus but not as much as if he broke it down more narrowly by audience.

So what are you waiting for? :-)

Best of luck, however you proceed from here. Hope to meet you soon,
ian

ps – What’s up with leaking the hire of Google’s CIO on April Fool’s day? No commentary meant on the hire but the timing was a bit inopportune, no?


Hey blog readers,

Thanks for reading. I’m curious to see a little discussion around this. I’m really not an expert in this arena, so I’m genuinely curious why my idea is a bad one and why no major is really pursuing this. I’m also curious to hear more examples of where this has/hasn’t worked. Personally I see focused labels succeeding with far more ease than non-focused ones. Dischord has made money in spite of themselves via focus, quality, and building trust with its fan-base. At the other end of the spectrum Jive focused on *just* pop music and ended up selling the company for $3B (the largest-ever acquisition of an indie label). There’s Epitaph (and Anti), Matador, Sub Pop, Merge, and then there’s TVT. A little label from Bloomington called Secretly Canadian can have an artist who wins The Mercury Prize. What’s to learn here? Very curious to get your thoughts. Please leave them below.

Thanks for dropping by,
ian

Trackbacks & Pings

  1. Ian Rogers Advice to Guy Hands on 27 May 2008 at 6:17 am

    [...] Ian Rogers posted his advice to Guy Hands at his blog and it makes for some very interesting reading. His core premise: [...]

  2. Unity Behind Diversity » Why don’t record labels act as post-filters? » Blaise Alleyne on 27 May 2008 at 5:09 pm

    [...] Rogers, former GM of Yahoo! Music, has written an open letter to Guy Hands, the head of EMI, suggesting just that. More specifically, Rogers suggests [...]

  3. Can Curating Save the Labels? « MyMediaMusings on 28 May 2008 at 9:30 am

    [...] over on TechDirt there are some comments on Ian Rogers (former GM of Yahoo Music) open letter to EMI in which he talks of a new(ish) [...]

  4. Conselho para salvar a EMI: apostar nos nichos | Remixtures on 29 May 2008 at 9:38 am

    [...] Ian Rogers, antigo director da Yahoo Music sobre quem eu já escrevi aqui, acha que sim e recomenda que a EMI aplique essa receita de modo a que passe a funcionar como um símbolo de qualidade para [...]

  5. Open Letter to EMI | Why I FAILED on 01 Jun 2008 at 5:54 am

    [...] at Fistfulayen has an idea-full post written to the head of EMI, Guy Hands. In it, he describes a powerful version of a “record [...]

  6. the mo bettah label « the Wordpress of Lucas Gonze on 03 Jun 2008 at 4:19 pm

    [...] Ian thinks it’s a music service organization oriented towards market niches: With the disappearance of advantaged label competencies such as superior production, distribution, and marketing, reconfigure your labels to be based around affinities and focused narrowly enough to serve roughly the same audiences from release to release. The labels would be very small teams responsible for fan cultivation, focused and direct marketing, and A&R. They would rely on EMI for service, support, and tools (generic marketing would happen on the EMI mothership, for example). [...]

  7. The future music label is… - Creative Commons on 03 Jun 2008 at 5:55 pm

    [...] brings me back to Ian’s proposal to Guy Hands: reconfigure your labels to be based around affinities and focused narrowly enough to serve roughly [...]

  8. Distorted-Loop.com » Interesting op-ed on EMI on 09 Jun 2008 at 2:43 am

    [...] Ian Rogers used to be the general manager of Yahoo Music. Now he’s got some advice for Guy Hands on how to sort out EMI: “With the disappearance of advantaged label competencies such as superior production, distribution and marketing, reconfigure your labels to be based around affinities and focused narrowly enough to serve roughly the same audiences from release to release. The labels would be very small teams responsible for fan cultivation, focused and direct marketing, and A&R. They would rely on EMI for service, support, and tools…” His blog post is an interesting read, as are the comments it’s attracted, read it here. [...]

  9. trucks for sale in the united states on 04 Jul 2008 at 11:08 pm

    trucks for sale in the united states…

    As you seem to know what your doing blogging wise, do you know what the best time of the week is to blog and have them read?…

  10. making time » Pandora, and arbitraging fame on 19 Aug 2008 at 4:50 pm

    [...] the recording industry: marketing.  To learn more about the three pillars, I suggest you read the classic Ian Rogers letter to Guy Hands.  It is pretty much required-reading for anyone looking to transform the music industry. [...]

  11. Topspin » GRAMMY Northwest MusicTech Summit Keynote on 18 Nov 2008 at 12:27 am

    [...] focusing on WMG’s stock price and start talking about the artists again, and I’m sure Guy Hands wouldn’t be too bothered if we stopped talking about the amount of money EMI is spending on [...]

Comments

  1. Andrew Weissman wrote:

    Ian – right on. Let’s take it one stop further and get at what I think you are getting at. Efficient labels can and should be “brands” that stand for some brand meaning, what you call “focus.” That focus does not, though it sure helps, have to be on a style of music. See, e.g., Dischord, Sub Pop. But they can stand for a sensibility, and that sensibility may or may not have a musical genre as its focus. Then one can be marketing the music and the label brand at the same time, a la “oh I’ve got the check out the latest releases from Sub Pop” – Ian I know you and I still do that and have for 20 years! ;-)

  2. Mark wrote:

    The virtual ink of this article is worth it’s virtual weight in golden pennies.

    Very persuasive, indeed.

    -Mark (www.theenrighthouse.com)

  3. Jonny O wrote:

    Of course, and this is the way I find much of the music I like. There are plenty of examples that can be drawn from but the one I like to use the most is On-U sound out of the U.K. – that’s a “brand” I can believe in. Take a guy who’s passionate about the niche (Adrian Sherwood and Dub Reggae) and I’ll buy damn near anything they put out whether I’ve heard of it or not. I trust them not to screw over my delicate sensibilities and they deliver time after time. (BTW – shout out to Pressure Sounds and your previous entry but that’s another discussion).

    My less-than-stellar business acumen suggests, however, that companies that have been receiving intermittent dump-truck deliveries of Benjamins are loath to accept a steady river of pennies. Maybe it IS better to burn out than fade away, if yer a major.

  4. HR wrote:

    I definitely think boutique is the way to go.

    Music is no longer the mass market cheeseburger it was 10 or even 5 years ago.

  5. Barb Roth wrote:

    I agree with your basic premise, Ian but I don’t agree with Andrew’s comment related to labels being brands. They are simply not viewed that way by the majority of the music consuming population, especially the younger generation who does not consume music in the album or unit based way in which an older generation was accustomed.

    In my opinion, it’s the artist that’s becoming the brand. Labels affiliated with major labels should become more like “channels” or “verticals” (to borrow terminology from the business world) that focus on specific markets or styles of music as Ian proposes. That’s where the efficiencies exist in the major labels if they want to survive and remain relevant going forward.

    But the focus for the consumer or fan must be on the artist, not on the organization supporting the artist. The label would be more important to the artist in that the artist should be concerned with aligning themselves with the organization that is best positioned to promote them within the niche or market that will be most receptive to them.

  6. George Howard wrote:

    Ian,

    excellent points throughout. The key refrain is the idea of “trusted sources.” In this manner, it’s less about genre, and more about conceptual continuity. That idea, in fact, is best exemplified by the person who coined the term: Frank Zappa. I ran the label that had/has his catalog, and the fact that his fans would (and continue to) buy his diverse array of work – irrespective of genre/style (or even label) – shows that the artist himself was the trusted source, and as long as the artist doesn’t betray that trust, that constituency is typically more than happy to come along for a conceptually consistent ride.

    The same applies on a larger level for labels. This works wonderfully for labels of a certain size: Vagrant, Dischord, Sub Pop (to a degree), Merge, Saddle Creek – and certainly, larger labels at their prime such as Chris Blackwell’s Island and Warners at a certain moment (though it’s been overblown through nostalgia) can also embody this conceptual continuity, and release a wide array of music where the constituency buys it b/c it’s from a trusted source.

    A label like EMI will have a harder time with this simply b/c of the scale. While Blue Note and the other imprints can (and, at times, do) have a certain conceptual continuity, they have been hogtied by the “central services” model where these imprints push their records out via a centralized group of distributors, marketers, etc. At that point, the label is a std deviation away from trust; that is, they’ve put their releases in the hands of others who don’t have the same relationship (if any at all) w/ the constituents, and the message/trust gets blurred.

    these central service approaches are really the pavement of good intentions on the way to hell.

    what i believe we have going on now is the compression of the three players Malcolm Gladwell identified in the Tipping Point several years ago. These players – mavens, connectors, and salesman (roughly correlating to: label, marketers, distributor/retailers) – were the necessary components of finding, marketing, and selling a record. Now, it’s possible (though not easy), through tech, for the maven to handle all the roles….as long as they maintain the status of trusted source and conceptual continuity.

    This is why we see sites like rcrdlbl and daytrotter (disclosure: i work w/ Daytrotter) are redefining what a label is. These sites/blogs/whatever are involved in the selecting/creating of the work (Mavens), the publicizing (connectors) and the transaction (salesman).

    my truest hope is that this trend will continue. the ultimate mavens out there today – those who are the true trusted sources, and those w/ the largest commitment to conceptual continuity – are clearly the bloggers. some are also good connectors. The moment these bloggers are given REAL tools to take on the role of salesman, i believe we’ll finally see something of a re-emergence of the music business. this will require far simpler micro payments, and transparent accounting practices; ie the fans will not buy into this if they feel their blogger is now just a surrogate label with the same practices as the old label. they will buy into it if they feel that their money is actually going to the artists they love, and they won’t mind a piece (a small piece) going to the blogger (maven) who played a part in connecting them.

    This is going to be hard for EMI to engage in, but it’s not impossible. they have a TON of stuff that these mavens would love to get their hands on – legally – and spread the word – if these mavens felt that by doing so some benefit would come back to the artist. EMI will have a hard time showing this.

    So, the central services have to be de-centralized, and spread. The larger labels have the ability to do this, but they have historic practices working against them (death spiral).

    Anyway, i sort of got carried away here. Sorry. thanks for your great blog.

    George

  7. Ryan Catbird wrote:

    I get the feeling that most of us in this discussion are over 30, and can still remember wandering into a record store, *aching* to find something new, and, in the absence of any other information, making selections based solely on an album’s label: “Well, if this album’s on Merge, I’m willing to give it a shot!”

    Any Millenials/youngsters out there wanna chime in? I’m very interested to hear the their take, because my suspicion is that for young people these days, a release’s label is, in many cases, unknown and unimportant. It’s a generation whose experiences with music occur all take place outside the physical space, with songs collected piecemeal here-and-there; sent around via IM; downloaded from blogs. They don’t need to rely on the reputation of a label to help them make decisions; their decisions are informed by their friends, by 2.0 recommendations, by their own ears with sample tracks. To kids today, an artist’s label is just the small, 9pt. note appended at the end of the online listing (there’s not even an ID3 tag for “label”).

    How many of us, of any age, can quickly name the labels are the following artists on: Cut Copy, Kanye West, MGMT, The National, Animal Collective., M.I.A., Amy Winehouse?

    I do agree that labels in future will be made or broken almost solely by Marketing; but I also think they’re destined to become an increasingly invisible presence to the consumer’s eyes. Millenials may be unprecedented in their brand knowledge and loyalty, but when it comes to their music, the bands are the only “brands” that enter into it.

    -Ryan
    (a guy who runs a perpetually-in-the-red indie label *for fun*)

  8. Ty White wrote:

    I’ll take my cue from Ryan and chime in. I am 22, an avid music listener and participant in the digital music realms, and can honestly say that labels are almost completely irrelevant to those of my generation. On a recent job application, I was asked to list my top 5 favorite labels of the last year and why–I literally had to go back and dig through MySpace profiles and label websites for a couple hours to figure out just who was associated where.
    Does this mean that the labels themselves are irrelevant? No, simply that their branding is. I’m with Barb Roth: the correct placement for the term “brand” in music has become the band. The long tail of music is so large that even accurate verticals are tough to nail.
    What I think has replaced the subscription to individual labels to find new music similar to one’s existing tastes is looking to one’s favorite bands for reccomendations. Who are my favorite bands touring with? Who is in their top friends on MySpace? Who are they blogging about? It’s implicit reccomendation rather than explicit 3rd party association.
    That being said, even that discovery mechanism is just one of many these days. The days when labels and radio stations told us what to like are over, and there is no dirth of folks aiming at creating the next big startup around how to cater reccomendations to a specific listener’s taste and listening habits.
    I see labels largely becoming as “behind the scenes” to the vast majority of listeners as promoters and managers are today. They’ll still have vital roles to play, but they need to put their egos aside and realize that they are merely the supporting acts.

  9. woodstockpatch wrote:

    i disagree about daytrotter and rcrdlbl, i trust my friends more than either of those sources for new music, AND…they will not be my go to source for catalog research and purchase either…why not be able to go to a full service EMI site for say the Can back catalog and an awesome Future Days T-shirt, some free live recordings/bootlegs and maybe a contest to win tickets to a reunion show and/or tribute festival, sell some banner ads to the traffic for all of the artist and boutique label sites, exploit the unused ad inventory for in house product, even if its pennies that Google guy has to do something and there will be more traffic than on the current Virgin or Capitol sites…EMI should be in the 360 Can business before they are in the 360 new artist development business…low barrier to entry and opportunity costs. its all about making more money from existing revenue streams, first, rather than building new ones soup to nuts, no? give people what they want. they already own the masters, the artwork, the trademarks, and there is plenty existing brand equity established and locked up in dormant catalog…even for the underground acts…restart your engines, EMI, I’ve got some jumper cables!

  10. Andrew Weissman wrote:

    Ryan Catbird – re: “Well, if this album’s on Merge, I’m willing to give it a shot!”

    Guilty as charged!

  11. Scott McDowell wrote:

    Great post and responses! At the risk of repeating a lot of great ideas here in different language, it’ll be nice to get down anyway. I tend to agree with the “trusted sources” line of thinking, but one thing we can learn from web 2.0 is that “trusted sources” are many and varied and constantly shifting and highly personal–more the “trusted bits and pieces” model. I don’t know anyone who reads the same 6 blogs. There’s too much media and noise to have another setting where one could buy the new Rough Trade single every week, or even read Forced Exposure and buy the good records, etc. Imagine trying to listen to everything Pitchfork dishes about. Let alone Pitchfork, rcrd lbl, Paper Thin Walls, and Stereogum, to give four. All “trusted sources” to someone, but none to each all the time.

    To this end, and to continue with “each artist is a brand”, likewise each deal must be a separate entity. The money is in complete attention, the slow build (long tail), rather than scaling to a massive audience as it has in the past. The value is in the expertise of the people at the big record companies, the knowledge of which cracks to fill with certain artists. It’s almost like IBM going from selling computers to selling services, the label must be a funnel of information rather than a manufacturer as in the past.

    As in a “360″ deal (hate that term, it’s so old-fashioned sounding to me!), I almost envision each artist having it’s own “label” with a custom marketing, sales, distribution, planning — a personal sale to go with a the very personal one-of-many “trusted sources” of a consumer. I can see the “business” being set up with a rotating cast on each team, a very matrixed environment, where employees can drop their individual expertise to each part of each project, as attention sees fit. This goes for back catalog artists as well (which I agree are HUGE source of potential income).

    The end goal/result is not “moving units” but penetrating the culture person by person, being above the noise. It’s more nuanced and challenging, but opportunities are many. The big hit will be the consolidation of many channels, some music related, some not (TV ads, movies, sneakers). The money will never be what it was in the past, with the enormous margins, but there’s are sustainable business models in every one of the previous comments!

    It must be a truly fascinating time to work at a major label, so much opportunity! EMI if you’re hiring, d me on twitter!

  12. Mark W. wrote:

    Funny ’cause the music biz has known this all along, but can’t seem to ever quash egos enough to keep labels focused on their core markets. Heck, most of the constituent labels started out as highly focused indies. But along the way, bloated egos and bad management foist a bunch of releases on them or compel them to excursions into other markets (agh, can anybody name DefJam rock acts…I can’t remember the names either).

    The success of niche-label-brands really proves up Mr. Rogers point. Master P’s No Limit Records. Eminem’s (OK, and Paul Rosenberg’s) Shady Records. Mike Ross’ Delicious Vinyl.

    So, in some ways the challenge is miniscule — it’s a matter of establishing internal structures that soothe egos and maintain focus. And, engender enough confidence to believe that label successes can be modeled and reproduced, rather than smothering hot labels with their own success (Interscope and Island are great examples of this).

    In the advice to Hands column, Teller and I often discussed how to turn EMI around. My recollection of our discussions included the following:

    a) change the name to “emi.com”, kind of confirming, in an “accenture” kind of way, the commitment to being digital and webwise.

    b) reduction in force by moving to Las Vegas (for tax and transportation reasons). Personnel costs decline.

    c) make a deal with the City of Las Vegas, who are desperately trying to establish themselves as the new entertainment capital, for a nice, big sweaty incentive package.

    d) make a deal with a developer/hotel operator to build an entertainment complex that leverages the legendary Capitol Records building and the brand.

    e) the complex includes office space for the operations, a residential performance arena and recording studios. create a real playground for artists and their fans.

    f) implement world-beating strategies…

  13. Shannon wrote:

    yo ian – a pretty accurate summary of that slightly tipsy, but very stimulating, discussion….i vaguely recall one other thing that we expanded on which fits with the more focused label-within-a-label discussion, and which both Scott and George (and others) touch on above, which is the shift in marketing/promotion. the focus on a particular style/genre/demo of music allows the smaller label/sub-label to continually leverage the same channels to promote new music…whether its bloggers, social networks, related videos, music recommendation engines etc. the labels have always recognised the importance of direct marketing and building fanbases, but have only scratched the surface of this power. building email databases??? i mean, c’mon. if there were real web/community managers (whatever you want to call them), who listened to the fans of artists and actively engaged them, think of the power. it may seem like one-to-one marketing and hardly worth the effort vs the previous hey day of big bang mass marketing on TV/radio, but really you are engaging the power of the crowd, as they will spread the word for good stuff they love (just look at all your act mentions above). so far, the majors have benefited from web 2.0 without really putting in a lot of effort (note to all my label friends: not that you haven’t made a big push for digital, but its been too focused on the distribution/$ side of the business, and not enough on the other). the potential is just sitting there waiting to be harvested.

    and finally, we also discussed having a true, detailed cross-referencing database of fans…Jane Doe loves Corinne Bailey Rae and Norah Jones (has every album, facebook fan, signs up for first shot at concert tickets), so if Jan Smith also loves CBR, could she be a Norah fan too? and could they both love Joss Stone???

    thanks for summarising an inspired debate….one of the highlights from this year’s MIDEMfest! miss ya

  14. scott mcdonald wrote:

    It would be interesting to see what sales have been like for a label such as WARP, who have slowly added ‘pop’ bands like !!!, Grizzly Bear and Maximo Park in the past decade. They used to be a very niche label — still are for the most part — but seem to be cautiously attempting to make their roster more diverse.

    I still get excited every time they sign a new band.

  15. Daniel Holter wrote:

    I think you’re spot on with “consumers need filters”… I’d say they work best in organic or peer situations, but it’s still a filter. Too much choice and diversity is paralyzing for most casual listeners.

    The challenge for the niche label approach, imho, would be having musically compatible acts, not copycats or “If You Liked Artist A You’ll Love Artist B!!” marketing dreck. As you mentioned with the golden days of Blue Note and RVG, you had a cohesive vision, a “sound” if you will, that was larger than any one fad or trend.

    I wish more artists I’ve worked with as producer would fully embrace the Artist As Brand mentality, too.

    I’d say, overall, a really great write-up, Ian. Great job… you aren’t charging for this advice, eh? :)

  16. Patrick Woodward wrote:

    Indeed.

    Labels having smaller pieces of responsibility to deal with will breed more effective contact with fans.

    More direct contact with fans will create happier fans.

  17. kether gallu-badat wrote:

    Nice post Ian. I’ve been following the whole EMI change closely and was invited by Mr. Hands and his team to take part in discussions and share my thoughts regarding EMI’s overhaul and future direction. It was interesting and I’m curious to see how it all plays out. I know Guy Hands has been criticized for not being a music industry executive, but sometimes it takes ‘non-industry’ folks to come in with a fresh perspective, a perspective that those in ‘the biz’ might not have. So who’s knows…. I co-own a small indie label called Latchkey and the ideas about staying niche oriented and branding are things that I think about constantly. It’s funny, because I’m someone who loves all types of music, but I also understand that the ways to market different styles and genres of music can be drastically different. If you don’t know a certain market you are in, it could mean lots of money lost. When I first started the label, I thought that maybe I’d just stick to one musical formula, but when I got going I felt myself not wanting to be limited. So then I decided that it’s ok to branch out a bit, because my core idea for even starting a label was to work with talented artists as partners and release cool music that hopefully others will enjoy. But, there must be focus, there must be a method to the madness. I think this is where branding comes in. Branding a label is nothing new. I’m in my mid-30’s, so albums and labels were always an important part of my music buying experience. I knew that if I walked into a record store and saw a new release from Def Jam, ROIR, Cold Chillin and others, that 9 times out of 10, it would be a quality release. Those labels that I trusted were brands that represented quality( and not always the same genre). Although Def Jam’s bread and butter was hip-hop, they did put out some rock and r&b (The Juice!) stuff , which I bought, just because it was Def Jam. It was the basic premise that these labels stood for quality music, which was etched into my head.

    I think that many of today’s indies still thrive from that same notion of being a brand that the consumer can trust. Even with todays’ young ‘shuffle generation’, you’ll find plenty of folks who will support (or at least give something new a shot) if it comes from a label / brand that they are familiar with and trust. Sub Pop, Def Jux, Victory and Stones Throw are good examples, and although you could label them as either Rock labels or Hip-Hop labels, they all tend to flirt with other styles and genres. I think that trying to find that middle path is important. If you have a core audience, you want to cater to them and continue to cultivate what works. Def do what you know works well. On the flip side, you don’t want to solely rely on the sale of a record in order to stay in business. So, if you have a bit of a diverse or eclectic catalog, there are greater opportunities at hand for things like sync licensing, publishing, etc. Keeping things small helps maintain focus and gives you a little more room for trial and error when it comes to dabbling in different genres.

    Anyway, I’m going to stop rambling now. Thanks for the good read!

  18. jkay wrote:

    To complete the Fast Times metaphor, music is not a large pizza to go, where people buy Domino’s based only on price and convenience. Music is unique in the entertainment world in two ways – it can be enjoyed asynchronously while doing other activities, and it is designed for repeat consumption. Most visual media are single serving, rarely worth viewing twice. Marketing can serve media companies well in creating a “big bang” event to launch a movie, but the music industry never understood how to nurture marketing in such a way that it could sustain a long product lifecycle.

  19. James wrote:

    Hi Ian.

    I just wanted to let you know that some artists are already realizing this on the Urban scene.

    I urge you to listen to this interview that Killer Mike, a major to independent artist, did with HoodHype.com: http://www.hoodhype.com/blog/?p=1388 (Sorry it’s NSFW)

    Specifically listen to his reply to how feels being an independent artist [18:30-20:30 and 22:00-25:00]:

    “I love it…I love being at a place where it matters what the music feels and sounds like.”

    “My music is based on what I had to go out and build – and that’s the audience. I’m real big on telling people that I don’t have fans, I have supporters. I feel like people that held me down the last 3 years without a major labels, they’re so much more the fans – they’re the supporters. Those people enable me to eat.”

    “I don’t look at it like I’m independent or major or any of that, I just look at it like I have 250,000 supporters in the United States…that feels damn good. Cause I’m not measuring myself by anyone else’s barometer, I’m measuring myself by the growth I create.”

    “So I’m free? What is freedom worth? Freedom is priceless”

    “I check my MySpace once a day at 12 noon Eastern time…and I communicate with you. I’m not quite finished the record I might have one song left and I want song ideas – you go to work everyday, gas prices $5 a galli, you got issues you want to talk about, let me be your voice”

  20. Chris L wrote:

    At 32 and an outsider to the music biz (to date, anyway), I’ve always been vaguely aware of labels, some more than others (Island, TVT, Astralwerks), but I can’t say they’ve played any kind of role in my music selection.

    The social web is teaching a whole new generation that faceless brands are meaningless, and it’s all about connecting with people. Fans are, and will be even more so going forward, loyal to people, not brands. They’ll follow the artists wherever they go.

    With artists and fans in direct communication, labels must accept that they are now in the backseat, and must redefine what it even means to be a “record label”.

    Affinity-based marketing seems intuitive, but as the tail gets longer, the potential lifespan of any given affinity shortens, making this an unreliable business model at the micro level. To stay macro, labels may dedicate resources to cultivating an evolving portfolio of affinities or sub-labels, but they will be in direct competition with every other music blogger and aggregation service on the net. This may be worthwhile as part of a broader marketing campaign but it is not a viable business model in itself.

    The label as a service — for cross-media marketing, technical tools and assistance, and business/career mentoring — seems like a more successful approach for building a long-term business. Build a framework that takes care of all the dirty details and keeps artists free to create and interact with their fans. But the artists definitely have the upper hand now, so labels must make sure they’re actually adding value and then getting the hell out of the way.

  21. Marc Vermut wrote:

    Ian, on point with what all of my observations and readings are pointing to. When distribution and content creation no longer provide incumbents with barriers to entry (e.g. no marginal cost digital downloads, inexpensive recording process), the incumbents need to change their business model and recognize their remaining strengths (e.g. scale, cash [for the time being], large potential customer base [if they accumulate, analyze and act on good data], loud megaphone in a crowded information society).

    Can’t really add more to the conversation than other commenters, but would like to point out that Seth Godin has also dropped knowledge on the subject twice:

    “Things you can learn from the music business (as it falls apart):”
    http://sethgodin.typepad.com/seths_blog/2008/01/music-lessons.html

    “The Live Music Talk”
    http://sethgodin.typepad.com/seths_blog/2008/03/the-live-music.html

  22. Doctor Alias wrote:

    [Please delete earlier comment]

    Lots of good stuff I agree with. No need to go over all of that. Mulling over the other things…

    Bands drawing audiences to other bands…This has certainly happened before. My favorite example (and on many days, my favorite band) is the Grateful Dead. Quit groaning, will ya? Certainly a band that thrived on a loyal audience that grew from strength to strength over the decades. And they offered much more than affinity: A veritable gravity-well! And through them there are a number of artists that their fans have come to know: NRPS, Howard Wales, Merl Saunders, Sanjay Mishra…really an endless list of unknowns who would have been even less known but for the Dead. And the Dead also revitalized interest in the music of a variety of well-known-at-some-other-time bands. Phish were a similar phenomenon. Especially with the music they played. I’d bet that never in the history of Velvet Underground did as many listen to “Loaded” at the same time as the night Phish played the album in its entirety. And it doesn’t always have to be about having a live relationship with the audience. Ry Cooder has drawn many people to the sounds of Western Africa, and many more people to wonderful musicians from Cuba, without playing a single concert. I am sure there are many other such examples of bands drawing audiences to new bands, or drawing new audiences to forgotten bands. All bands after all started out as rabid music fans.

    But these affinities were all constructed by the musicians on their own. Not by some promoter with an eye to commerce; you’d have to be a really hardened cynic to think that. In the case of the Dead just some chemistry between the audience and the band that led to a subculture of trust which among other things included taste in music. (No comment on whether the other things were good or bad.) In Ry Cooder’s case, a quest to discover and play new music. Exposing his finds to others almost seems incidental to his goal.

    Not that affinity based labels have not thrived. Stax and Motown come to mind. But they were, in each case, just one sound. Island I suppose would count. Nonesuch and Bluenote are good examples as well. Still, it is one thing to draw bands with their idols. A different thing altogether to then expect the band to draw similar audiences as their idols. Would they draw them intrinsically, and it is simply a matter of getting the music heard by right ears? Does the label just have to focus its marketing and promotions around audiences that have already been identified by the bigger draws? Is this the hook for the new bands then? That signing to the major will increase their likelihood of being heard in large numbers by folks who are most likely to be interested in their music, and becoming their fans. So that’s what it is, isn’t it? The goal: to maximize the odds of finding your true and loyal audience in large numbers.

    But these days when the trend seems to be albums without identities and people just buying (that is those that still do) songs, can bands have a massive following at all? Can a new band really expect that? Sure, there’s your handful of post-Madonna divas but really, what was the last great mainstream band with universal appeal? You too will have trouble remembering that far back. What seems to be the case is that there is definitely an increase in focused niche audiences. Not large. Loyal, yes, and can provide enough subsistence for a band with realistic expectations in the current world. Sort of back to basics isn’t it? Forget about being a superstar who everybody in the world recognizes. Do you really want to be that? Just get back to creating the music you love and enjoy what you do and the rest will take care of itself, then? To some extent I suppose. But how do you get somewhere from there?

    I don’t have the answer yet and perhaps I might chime in when I do but here’s something to think about…

    Well, remember the musicians who were rabid music fans that we talked about earlier? In today’s world, you don’t have to be a musician to serve as a music conduit for a whole range of people. To be the filter and channel for good music that most passive listeners seek. The rabid fans can be the new radio stations for their private audiences. They can create virtual labels. Which are far more flexible than physical labels; a band can be in multiple virtual labels without even knowing so. Is it not better to have multiple people targeting you to the right audiences?
    So do affinity wells get actively cultivated around real label imprints by the majors? Or is it easier for them to come about organically and virtually?

  23. Ethan Bauley wrote:

    Another thought for promoting in reverse markets is for EMI go radically transparent with every single part of their business.

    (i.e. instead of making a reality TV show about how cool it is to run a record label, have every single person in the company blog their job, especially A&R and promoters and tech people)

    The Fred Wilson model…

  24. Ethan Bauley wrote:

    I think Ian’s point about label brand equity is much deeper than a backwards look at “remember when you could rely on label X for Y genre”.

    The argument that the main differentiator for labels is their ability to market (production and distribution being commodities) is true. However, the issue is EMI’s ability to promote artists in the era of reverse markets…not in an era of abundant attention and mass media outlets.

    By “reverse markets” I mean listeners looking for artists…instead of labels looking for an audience.

    Investing in organizing genre/psychographic-specific communities that attract and retain listeners (instead of identify and intercept them) around label “names” (Capitol, et al) is probably the highest ROI strategic move that EMI can make.

    A concrete example:

    Google any of the following terms: “shoe gaze music” “ok computer” “indie rock” “miles davis”

    At the top of the SERP will be [roughly]: a Wikipedia entry, a video, and a Last.fm tag…because these “trusted info sources” have the [objectively] best information around these subjects. As Umair might say, they’ve created an enormous amount of context for listeners, who can engage further with a very VERY high return on their time/attention.

    Wouldn’t it behoove a record label to “own” that SERP? (e.g. shouldn’t Capitol.com be THE best information source about keyword “OK Computer”? They freaking own it!)

    EMI needs a simple heuristic to guide it’s decisions; my suggestion is that they continually ask themselves: “How does this help fans of artist/genre X find EMI artist Y”?

    (note: I thought I submitted this yesterday, but I must have fumbled the “Post” button)

  25. jeff wrote:

    first!

  26. Hajo Janssen wrote:

    Dear Ian,

    thank you so much for your post, your statement sounds like an advertisement for our platform http://www.dooload.de. We agree with you, that these days an artist has multiple possibilities to sell and promote his music himself and may have quicker success on certain level, than the older days. But signing up with a small independent label and everything will be fine with making career in the music biz – we don’t think it is as simple as that. To rely on somebody else, even if you guess, that a small independent label will be more effective in artist development than EMI could be, is the wrong attitude to start a music career today. We at DooLoad think, that today days, artists need a helping hand to concentrate themselves on making music but take advantage from all the possibilities the Internet provides the same time. We developed the “DooLoad Artist Tools” where musicians can distribute and promote their music worldwide and get instant feedback about their sales and hook up to other musicians in our community. We started six about weeks ago with the “Artist Tools” and the response from the artist is fabulous.
    We believe that the big challenge over the next years will be to develop tools an strategies to put the artist into the position to use the global chances the Internet provides more effectively.
    I look forward to see, if “Topspin” goes into the same direction….

    Hajo Janssen
    Vice President Martketing, DooLoad.de

  27. Kristian wrote:

    Hey Ian, I love the letter. I think you are completely spot on and obviously have a firm grasp of what the music community wants… and needs.

    I think that small labels have an amazing opportunity to help the community discovery some truly amazing bands. However, like your letter suggests, they struggle getting their artists the distrobution needed. Take Everfine Records for example. They do an AMAZING job of keeping O.A.R.’s community engaged. In fact, they seem to have brought on some new artists which keep their community listening to their music, as it resembles the music they cater to.

    Everfine states “The company’s grassroots approach focuses on street team promotion, touring, tour promotion, strategic micro-marketing, artist development, and more.” This is exactly what is needed to get an artist discovered. It just doesnt bring in the critical mass to get the artist to mass stardom. I mean don’t get me wrong, O.A.R. is known, but I think it is their relentless efforts in VERY long tours. This is where a large label could help O.A.R. get more radio play in cities which they arent as popular. In NY, they can sell out Radio City Hall, but here in Portland, they can barely sell out the Roseland Theater (a very small venue). As an avid fan and promoter for O.A.R., I see first hand how they arent getting the spins they deserve on the air. I see how they bust their ass touring, but barely gain any new listeners or fans. They may be doing OK on the East Coast, but Everfine seems to be limited in their abilities to get them really popular on the West Coast. IMHO, this is exactly where a large lable would be of a great benefit, not only to the artist, but to the fans and music community as well.

    I hope all that made sense and is inline with your thoughts. I havent had much caffine yet today. :)

  28. scott mcdonald wrote:

    Anyone see this:http://www.nypost.com/seven/05292008/business/rock_n_relief_plan_113009.htm

  29. Patrick Woodward wrote:

    The risk that EMI would take on by implementing your proposal is probably not viewed by EMI as favorable.

    A better option is for the major labels to use technologies and services created by smaller companies who are actually building pieces of the new music business.

    For these small companies this is a challenge in education and in finding the areas of the current business where the majors are least likely to create new ways of working.

    For example, if I was running a major I would jump all over software and services that would help me manage or organize groups of fans. If I didn’t have to spend money creating that service in house…hell yea I’d use it.

    With this in mind, what service and web software options do majors have?

  30. allen louison wrote:

    hmm, seeems to be something in the air these days feeding the “label as brand” debate. just the other day hypebot mentioned a similar sentiment in their “can the music industry save itself series” (http://www.hypebot.com/hypebot/2008/05/can-the-music-1.html) and followed up today with quote from capitol/virgin/emi’s jesse kanner (http://www.hypebot.com/hypebot/2008/05/building-the–1.html). i think your post and hypebot’s dovetail nicely.

    for me personally, the scaliability issue sticks in my head and in my own past ruminations i often questioned myself on whether the label as brand concept is a bit anachronistic, or just a bit too “music-geek” to reach the tipping point. sure, as a kid i was pretty rabid about any release from 4AD, subpop, projekt, etc., but very few of my mutual music-fiends experienced that transferrance of their love of the artist to the label.

  31. kim jones wrote:

    This blog/letter to Guy is normal banter from “music industry types” after a few glasses of rose, on the beach, etc. I’m surprised The Who didn’t come up in the letter. “I can see for miles…and miles…and miles…and.”

    Everyone knows what the problems are and there’s just too many over-see’ers and no do’ers. No one is curing cancer here so it’s nothing new. Labels lost bands when new technology came out but with the scare of digital, they didn’t know how to market it. Everytime a new medium came out, labels still promoted as they did, not just by radio and MTV (hello, there is more out there). For those of you who can read, there were TONS and TONS and TONS of music magazines/publications where most people would get their information (while having the internet), people’s worlds revolved around music. There would be billboards, signs, etc. directing your to your record store to buy the latest copy of….. Now with the records store as a last resort, going digital, how hard can it be to start off by 1) listing downloads on your label webpage? Hello. We’ve already worked out what was wrong (4 years ago) but the dinosaur of the label didn’t keep up. That was previous error. Too many people swanning, having meetings but doing nothing about “change.”

    I’m sure Guy received a ton of emails like this, there was nothing new said nor any ideas on how to change it. I think Guy will do just fine with his plan as long as he keeps in sight his core group that he needs to withstand this. The year of the Big Label is not dead. They just need to work a little harder at the common goal – getting the music out to the masses.

    Ian, don’t hold your breath on running a major in the near future.

  32. kim jones wrote:

    P.S. If you’re a musician starting out, why wouldn’t you go with a major and build from that?? So many bands die trying.

    Also, why do you recommend having the same genre on 1 label?? That’s not sensible, that’s OVERKILL (and I don’t mean the band). Why not have a variety? I like Daft Punk, Iggy Pop, Dave Gahan, The Stones and Lenny Kravitz. Does that make the label horrible for reaching out to all kinds of music? NO. When you solidify, you lose artists and the ability to reach out to all kinds of people. Too much of the same thing is B-O-R-I-N-G. Maybe that model works for jazz but surely not rock-n-roll. See “The Bigger Picture.”

  33. Michael Winger wrote:

    The development of a higher quality product is at the heart of what major labels are about. That’s why they became big in the first place. That’s what attracts their underpaid workers. There have always been small labels who can work the niche market (and probably always will be). That means huge competition in a low margin environment if the majors choose to operate there.

    The ability to create and market commercially viable music, to whatever audience, by developing an artist (songs, image, sound, strategy, marketing plans) is what separates successful acts from the not so successful ones. Major labels have more resources so they can attract these sorts of acts, and (perhaps more importantly) the managers of those acts. A seriously focused team of artist support is necessary to take an act from “buzz band” to one that makes millions of dollars.

    The selling / marketing aspect of the label is tied intrinsically to the product. Virtually all the major labels have forgotten they need to develop an artist to make sales. Or else they have people who don’t really understand how to make a good record anymore. But the label problems go way beyond just niche marketing.

  34. Aidan Nulman wrote:

    I’m glad I came across this post — this is a concept I’ve also been talking about for a while.

    “Social media” keeps telling us that people love connecting with like-minded people, and marketing breakthroughs keep telling us that “trusted peers” are much more influential than faceless corporations. I, like you, don’t understand why record labels are having a hard time acting on the obvious actions driven by these obvious insights.

    Any response from Hands yet?

  35. Bruce Houghton wrote:

    I advocated for labels dividing into indie like teams with a common back office to serve the niches a couple weeks ago as part of an ongoing Can The Music Industry Save Itself? on Hypebot.com.

    Why don’t they do it? Fear of change. They’ve been chasing mega-hits for so long; they can’t admit that day is over. After all one hit pays for many misses. And if they go for this plan then it means sweeping the rest of their old school buddies out the door. I don’t think they’ll need an “I Know How To Buy A Hit” label team.

    But the idea could lead to the creation of some new major label groups created from the bottom up. For example, ATO – who just bought back their independence from Sony BMG for $5M and says it wants to form a “legacy” indie have the cash an the smarts to do it.

  36. Chainsaw wrote:

    Seriously – has anyone ever bought an EMI recording JUST because it was on the EMI label. For small labels, that’s the DEFINITION of success.

  37. Christopher wrote:

    Hello Mr Aloha, Mr. Hands
    How Are Your Doing Tonight
    Happy New Year Very Nice To Meet You
    My Name Is Christopher 37 Year’s Old Male Also Poor Man
    From Far Rockaway Ny Also Poor Man
    I’m Trying All Life Start My Onwer Record Label I’m Ascap Member & Founder
    Cham Patrick Music Group And Also A
    Music Producer & Songwrtier & Singer
    Can Please Help Me Make My Music Group
    In To Real Label Becouse Was Going To Sale Is And Some One Buy My Business From Me

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